Flevy Management Insights Q&A

How can companies assess and mitigate the risks of entering new emerging markets?

     David Tang    |    Globalization


This article provides a detailed response to: How can companies assess and mitigate the risks of entering new emerging markets? For a comprehensive understanding of Globalization, we also include relevant case studies for further reading and links to Globalization best practice resources.

TLDR Companies should conduct thorough Market Analysis, Strategic Planning, Risk Management, and form local partnerships to mitigate risks when entering emerging markets.

Reading time: 5 minutes

Before we begin, let's review some important management concepts, as they related to this question.

What does Market Analysis and Strategic Planning mean?
What does Risk Management and Compliance mean?
What does Local Partnerships and Cultural Integration mean?
What does Performance Management and Continuous Improvement mean?


Entering new emerging markets presents a complex array of risks and opportunities for organizations. The allure of untapped markets, potential for high growth rates, and diversification benefits are often counterbalanced by political instability, cultural differences, regulatory challenges, and operational complexities. A meticulous approach to risk assessment and mitigation is paramount for organizations aiming to capitalize on these opportunities while safeguarding their investments and reputation.

Market Analysis and Strategic Planning

Comprehensive market analysis forms the bedrock of successful entry into emerging markets. Organizations must conduct in-depth research to understand the market size, growth potential, competitive landscape, customer preferences, and regulatory environment. This involves leveraging high-quality data and insights from reputable sources such as McKinsey & Company or Bloomberg. For instance, McKinsey's Global Institute provides valuable insights into economic and consumer trends across emerging markets, helping organizations tailor their market entry strategies.

Strategic Planning is critical in aligning an organization's core competencies with the opportunities identified through market analysis. This includes evaluating the organization's readiness to enter a new market, identifying potential barriers to entry, and developing a clear value proposition. A well-articulated Strategy Development process ensures that the organization sets realistic goals, allocates resources efficiently, and establishes a timeline for market entry and expansion.

Moreover, organizations should adopt a phased approach to market entry, starting with pilot projects or partnerships with local entities to test the waters before committing significant resources. Real-world examples include global tech companies partnering with local firms to gain market insights and navigate regulatory hurdles effectively. This strategy not only minimizes risks but also facilitates learning and adaptation in dynamic market conditions.

Are you familiar with Flevy? We are you shortcut to immediate value.
Flevy provides business best practices—the same as those produced by top-tier consulting firms and used by Fortune 100 companies. Our best practice business frameworks, financial models, and templates are of the same caliber as those produced by top-tier management consulting firms, like McKinsey, BCG, Bain, Deloitte, and Accenture. Most were developed by seasoned executives and consultants with 20+ years of experience.

Trusted by over 10,000+ Client Organizations
Since 2012, we have provided best practices to over 10,000 businesses and organizations of all sizes, from startups and small businesses to the Fortune 100, in over 130 countries.
AT&T GE Cisco Intel IBM Coke Dell Toyota HP Nike Samsung Microsoft Astrazeneca JP Morgan KPMG Walgreens Walmart 3M Kaiser Oracle SAP Google E&Y Volvo Bosch Merck Fedex Shell Amgen Eli Lilly Roche AIG Abbott Amazon PwC T-Mobile Broadcom Bayer Pearson Titleist ConEd Pfizer NTT Data Schwab

Risk Management and Compliance

Risk Management is a critical component of the market entry strategy. Organizations must identify, assess, and prioritize risks associated with political instability, economic volatility, legal and regulatory compliance, and operational challenges. Tools such as PESTLE analysis (Political, Economic, Social, Technological, Legal, and Environmental) and SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) are invaluable in this context. Engaging with consulting firms like Deloitte or PwC can provide organizations with expert insights into risk management practices tailored to specific emerging markets.

Compliance with local laws and regulations is non-negotiable. This includes understanding and adhering to tax laws, import-export regulations, labor laws, and data protection standards. Failure to comply can result in significant financial penalties, legal challenges, and reputational damage. Organizations should invest in legal and compliance expertise, either in-house or through partnerships with local law firms, to navigate the complex regulatory landscape effectively.

Additionally, establishing robust internal controls and governance structures is essential to manage operational risks. This includes setting up local operations with a clear understanding of supply chain risks, quality control, and human resource management. For example, Accenture's research highlights the importance of digital transformation in enhancing supply chain resilience, a critical factor for success in emerging markets.

Local Partnerships and Cultural Integration

Forming strategic partnerships with local businesses can provide a valuable entry point into emerging markets. These partnerships can offer insights into the local market dynamics, consumer behavior, and regulatory environment. They also facilitate access to local networks, distribution channels, and talent. A notable example is the partnership between global consumer goods companies and local distributors to leverage their extensive distribution networks and market knowledge.

Cultural Integration is paramount for long-term success in emerging markets. Organizations must understand and respect local customs, traditions, and business practices to build trust and rapport with local stakeholders, including customers, employees, and business partners. This involves adapting marketing strategies, product offerings, and even business models to align with local preferences and expectations.

Investing in local talent and leadership is also crucial. Local employees bring invaluable insights into the consumer mindset and can navigate the socio-political landscape more effectively. Leadership development programs focused on cross-cultural management and local market nuances can empower local teams and foster a culture of inclusion and innovation.

Performance Management and Continuous Improvement

Once an organization has entered an emerging market, ongoing Performance Management is critical to monitor progress, measure success against predefined KPIs, and make informed decisions. This includes regular market analysis, customer feedback, and competitive benchmarking to stay ahead of market trends and adjust strategies as necessary.

Continuous Improvement is essential to refine products, services, and operations based on market feedback and performance data. This iterative process helps organizations stay relevant and competitive in fast-changing markets. Leveraging technology and data analytics can provide actionable insights to drive innovation and operational excellence.

In conclusion, entering new emerging markets requires a strategic, disciplined approach to risk assessment and mitigation. By conducting thorough market analysis, managing risks effectively, forming strategic local partnerships, integrating culturally, and focusing on continuous improvement, organizations can navigate the complexities of emerging markets and achieve sustainable growth. Real-world success stories underscore the importance of adaptability, local engagement, and a long-term commitment to realizing the full potential of these dynamic markets.

Best Practices in Globalization

Here are best practices relevant to Globalization from the Flevy Marketplace. View all our Globalization materials here.

Did you know?
The average daily rate of a McKinsey consultant is $6,625 (not including expenses). The average price of a Flevy document is $65.

Explore all of our best practices in: Globalization

Globalization Case Studies

For a practical understanding of Globalization, take a look at these case studies.

Globalization Strategy for Construction Firm in Emerging Markets

Scenario: A mid-size construction firm, specializing in residential and commercial projects within emerging markets, is facing challenges due to the impacts of globalization.

Read Full Case Study

Global E-Commerce Expansion Strategy for Retail SMEs

Scenario: A mid-sized e-commerce firm specializing in bespoke home goods is facing challenges in scaling operations internationally.

Read Full Case Study

Globalization Strategy for Boutique Luxury Brand

Scenario: The organization in question is a boutique luxury brand specializing in high-end fashion accessories.

Read Full Case Study

Global E-Commerce Localization Strategy for SMEs

Scenario: The organization is a small to medium-sized e-commerce player specializing in lifestyle products.

Read Full Case Study

Globalization Strategy for Professional Services Firm

Scenario: The professional services firm operates in the competitive landscape of global markets, offering consulting, audit, and advisory services.

Read Full Case Study

Global Market Entry Strategy for Pipeline Transportation Company

Scenario: A leading pipeline transportation company specializing in the conveyance of natural gas faces challenges posed by globalization as it seeks to expand its operations.

Read Full Case Study


Explore all Flevy Management Case Studies

Related Questions

Here are our additional questions you may be interested in.

How can companies ensure compliance with varying data protection regulations across different countries in their global operations?
Companies ensure compliance with global data protection regulations through a comprehensive approach involving Strategic Planning, leveraging Technology, and Regulatory Engagement, focusing on developing a Global Data Protection Strategy, technology use for compliance, and agility in adapting to regulatory changes. [Read full explanation]
What are the key drivers of globalization?
Technological advancements, trade liberalization, multinational corporations, economic factors, and cultural dynamics are key drivers of globalization impacting organizational strategies. [Read full explanation]
What are the most effective strategies for managing cross-cultural differences within global teams to enhance productivity and collaboration?
Effective management of cross-cultural differences involves Understanding and Respecting Cultural Differences, Adapting Leadership and Management Styles, and Establishing Clear Communication Protocols to enhance global team productivity and collaboration. [Read full explanation]
What are the main pillars of international trade?
International trade relies on three main pillars: Regulatory Environment, Market Access, and Trade Finance, essential for global market success. [Read full explanation]
What are the five stages of globalization?
The five stages of globalization are Domestic Focus, International Exploration, Exportation and Expansion, Strategic Integration, and Globalization Maturity. [Read full explanation]
What role does sustainability play in shaping global business strategies in response to increasing environmental concerns?
Integrating Sustainability into Strategic Planning, Risk Management, and Innovation is essential for companies to mitigate risks, comply with regulations, and unlock growth opportunities amidst rising environmental concerns. [Read full explanation]

 
David Tang, New York

Strategy & Operations, Digital Transformation, Management Consulting

This Q&A article was reviewed by David Tang. David is the CEO and Founder of Flevy. Prior to Flevy, David worked as a management consultant for 8 years, where he served clients in North America, EMEA, and APAC. He graduated from Cornell with a BS in Electrical Engineering and MEng in Management.

To cite this article, please use:

Source: "How can companies assess and mitigate the risks of entering new emerging markets?," Flevy Management Insights, David Tang, 2025




Flevy is the world's largest knowledge base of best practices.


Leverage the Experience of Experts.

Find documents of the same caliber as those used by top-tier consulting firms, like McKinsey, BCG, Bain, Deloitte, Accenture.

Download Immediately and Use.

Our PowerPoint presentations, Excel workbooks, and Word documents are completely customizable, including rebrandable.

Save Time, Effort, and Money.

Save yourself and your employees countless hours. Use that time to work on more value-added and fulfilling activities.




Read Customer Testimonials

 
"As a young consulting firm, requests for input from clients vary and it's sometimes impossible to provide expert solutions across a broad spectrum of requirements. That was before I discovered Flevy.com.

Through subscription to this invaluable site of a plethora of topics that are key and crucial to consulting, I "

– Nishi Singh, Strategist and MD at NSP Consultants
 
"[Flevy] produces some great work that has been/continues to be of immense help not only to myself, but as I seek to provide professional services to my clients, it gives me a large "tool box" of resources that are critical to provide them with the quality of service and outcomes they are expecting."

– Royston Knowles, Executive with 50+ Years of Board Level Experience
 
"As an Independent Management Consultant, I find Flevy to add great value as a source of best practices, templates and information on new trends. Flevy has matured and the quality and quantity of the library is excellent. Lastly the price charged is reasonable, creating a win-win value for "

– Jim Schoen, Principal at FRC Group
 
"One of the great discoveries that I have made for my business is the Flevy library of training materials.

As a Lean Transformation Expert, I am always making presentations to clients on a variety of topics: Training, Transformation, Total Productive Maintenance, Culture, Coaching, Tools, Leadership Behavior, etc. Flevy "

– Ed Kemmerling, Senior Lean Transformation Expert at PMG
 
"Flevy.com has proven to be an invaluable resource library to our Independent Management Consultancy, supporting and enabling us to better serve our enterprise clients.

The value derived from our [FlevyPro] subscription in terms of the business it has helped to gain far exceeds the investment made, making a subscription a no-brainer for any growing consultancy – or in-house strategy team."

– Dean Carlton, Chief Transformation Officer, Global Village Transformations Pty Ltd.
 
"As a consulting firm, we had been creating subject matter training materials for our people and found the excellent materials on Flevy, which saved us 100's of hours of re-creating what already exists on the Flevy materials we purchased."

– Michael Evans, Managing Director at Newport LLC
 
"I have used Flevy services for a number of years and have never, ever been disappointed. As a matter of fact, David and his team continue, time after time, to impress me with their willingness to assist and in the real sense of the word. I have concluded in fact "

– Roberto Pelliccia, Senior Executive in International Hospitality
 
"I have used FlevyPro for several business applications. It is a great complement to working with expensive consultants. The quality and effectiveness of the tools are of the highest standards."

– Moritz Bernhoerster, Global Sourcing Director at Fortune 500



Download our FREE Strategy & Transformation Framework Templates

Download our free compilation of 50+ Strategy & Transformation slides and templates. Frameworks include McKinsey 7-S Strategy Model, Balanced Scorecard, Disruptive Innovation, BCG Experience Curve, and many more.